ISLAMABAD (MNN); The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Friday warned that Pakistan’s industrial sector was facing a deep crisis due to soaring energy tariffs and excessive taxation, resulting in widespread factory shutdowns and growing unemployment.
FPCCI officials recalled that in December it was reported that more than 100 spinning mills and over 400 ginning factories had become non-operational. The closures were attributed to unprecedented taxes, high electricity prices, and a sharp increase in under-invoiced cotton yarn and fabric imports from China and other countries.
Addressing a press conference in Islamabad, FPCCI President Atif Ikram Sheikh said expensive electricity had badly damaged industrial activity, particularly in the textile sector. He stated that around 150 large textile units had shut down over the past two years.
Sheikh urged the government to immediately abolish cross-subsidies imposed on industries and called for a reduction in the policy rate to single digits. He proposed cutting interest rates to nine percent initially and later to seven percent to stimulate industrial growth and attract investment.
Business leader SM Tanvir said the alarming situation had also been highlighted in the World Economic Forum’s 2026 report, which raised Pakistan’s risk rating. He said the report indicated declining business activity and shrinking employment opportunities, while the small and medium enterprises sector had been reduced to near collapse.
Tanvir criticised tax policies, alleging that non-filers faced little scrutiny when depositing money in banks, whereas compliant taxpayers were heavily burdened. He claimed the Federal Board of Revenue appeared more focused on protecting banks than supporting businesses.
FPCCI officials warned that if the issue of high electricity prices was not addressed urgently, industrial activity could grind to a complete halt. They criticised the government and the Power Division for failing to pass on the benefit of reduced electricity tariffs to industrial consumers, despite a recent base tariff cut determined by NEPRA.
They pointed out that although surplus electricity was available in the country, citizens were paying capacity charges for unused power. The officials added that industrial electricity tariffs in Pakistan stood at around 12.5 cents per unit, compared to approximately 7.5 cents in India.
Appealing to the prime minister, FPCCI leaders urged him to “take the industry off the ventilator” and reduce taxes on the export sector to prevent further economic deterioration.
An analysis cited by FPCCI noted that Pakistan’s export sector was subject to one of the harshest tax regimes in the region. Exporters face advance income tax, minimum turnover tax, super tax and multiple withholding taxes across supply chains, while refunds of sales tax and duty drawbacks are often delayed. High and unpredictable energy prices further weaken export competitiveness, as industries cross-subsidise domestic consumers, absorb losses from theft and inefficiency, and pay capacity charges for unused electricity generation.
